Hawaii Amazon Tax Back from the Dead

History may repeat itself. Last year, Hawaii bloggers, webmasters, and other online businesspeople rallied to fight a state plan to tax retailers like Amazon.com for business generated by local affiliates. The state was looking for extra cash, but opponents of the tax bill argued that Amazon.com would just drop its Hawaii partners.

Ever so quietly, House Bill 1183 was making its way through the Capitol. It was introduced by Rep. Isaac Choy (Dist. 24, Manoa, University). It had already passed the House and crossed over to the Senate on March 10. Today, it passed the Economic Development and Technology (EDT) committee, and is now before the Senate Ways and Means committee (WAM). Through some legislative shuffling, the ‘Amazon Tax’ bill is now SB1355. (See below.)

Once again I got the heads up from Dean Takamine of Synertech Media, who raised the alarm last time on TechHui. And once again, he makes a pretty clear case for fighting HB1183 SB1355.

For one, should the bill pass, we no longer need to wonder if Amazon.com will terminate its relationship with Hawaii website owners. It has before, and it will again. In short, HB1183 SB1355 won’t get any additional tax revenues from Amazon.com and similar companies.

Meanwhile, local people will lose this source of income… income that, of course, would have been taxed. Worst of all, the state would actually lose money as well, spending additional resources to implement and regulate this new tax.

“The real beneficiary of this bill are the ‘Big Box’ retailers like Best Buy, Walmart, etc.,” Takamine writes. “They are spending millions of dollars to lobby across the nation and to fool the public that they are ‘pro small business.’ Since when is Walmart ‘pro small business’? Will Hawaii fall into this trap?”

“I think we should promote Hawaii’s online media industry, not try to destroy it,” Takamine says. “It is a clean and low impact industry that generates most of it’s revenue from out-of-state.”

If you agree (or even if you don’t), be sure to contact your legislator and submit testimony. Keep an eye on the HB1183SB1355 hearing notices, and if you can, go down to the Capitol to make sure your voice is heard, and that they see the faces of the people affected by this legislation.

UPDATE: Takamine reports that Sen. Carol Fukunaga gutted HB1183 and replaced it with SB 1355, the “Streamlined Sales/Use Tax” bill. This after Rep. Angus McKelvey gutted SB1355, and put in the entire contents of the original HB1183. “So the bill is still alive – in another form.” Now SB1355 is the one to watch.

On Thursday night I went to the capitol to testify. Personally, it was very frustrating as the bill pass.

As I tried so hard to explain the true implications of this bill, it seems the Representatives were tuned out and didn’t really care as they were caught up in thinking that somehow they would collect this windfall of tax money from Internet purchases.

By the way, I was shocked to hear they are estimating that they will collect $35 million dollars from this Internet bill. Little do they know it will not even collect $1 million and end up costing the state much more in loss revenue, regulation costs and litigation.

They will also require that the Internet retailers to send them private data of your online purchases. This is a huge privacy issues, not only does the state want your money but it want to know every single place you purchased a product online (porn sites anyone?). They will also require online retailers to send you an annual report of your total online purchases so you can pay any uncollected internet taxes when you file your income tax. As if you need anymore paper work in filing your taxes.

Here are the results of the voting, please contact your representatives to educate them about this bill.

I was part of the Amazon Slap a couple of years back. Hawaii State Legistlators were looking for an easy fix. Amazon immeidately closed their associate (affiliate) program to everyone living in Hawaii.
Luckily, Linda Lingle vetoed the bill and it did not become law. This is a very short sighted bill and will not benefit Hawaii Taxpayers at all.
I pay state taxes on all of my Amazon earnings. And I am sure I am not alone. We need to let our legistlaors know this bill will cripple small Internet Business.